SAC To Speak With Clients On Insider Case

Nov 27 2012 | 3:31pm ET

Facing new insider-trading allegations, SAC Capital Advisors plans to hold a conference call with investors tomorrow in an effort to assuage their concerns.

SAC has already reached out to several key investors following the arrest of former portfolio manager Mathew Martoma last week. Martoma made his first appearance in Manhattan federal court yesterday; he has not entered a plea.

It is unclear whether Cohen himself will take part in the call.

"Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government's inquiry," the hedge fund said last week.

Martoma's case is not the first time SAC has been linked to insider-trading; indeed, SAC veteran Anthony Chiasson, co-founder of hedge fund Level Global Investors, is currently on trial in a case that has already won a guilty plea from a former SAC analyst. Martoma is the sixth former SAC employee charged with insider trading.

Prosecutors say his case is the largest insider-trading scheme ever. It is also the first with a direct link to Cohen. While the SAC founder was not charged in the case, he was named as "Portfolio Manager A" and the "owner" of the hedge fund Martoma worked at, and according to prosecutors and the Securities and Exchange Commission, traded on confidential information provided by Martoma.

Martoma allegedly earned SAC $276 million trading on confidential tips about Alzheimer's drug trials.

There is no indication that Cohen knew that Martoma's information was non-public, but Federal Bureau of Investigation agents reportedly sought Martoma's cooperation in building a case against Cohen a year ago.

Martoma fainted on the front lawn of his Boca Raton, Fla., home during the meeting with the FBI. He quickly recovered, but refused to cooperate. Martoma reportedly passed out after an initially calm conversation became more heated, with the FBI agents threatening that Martoma could be sent to prison for securities fraud.

"It was an upsetting experience," his lawyer, Charles Stillman, told The Wall Street Journal. Stillman has said he is confident that his client, who faces up to 20 years in prison if convicted, will be exonerated.

There have been no talks about a plea agreement, according to the Journal.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note